Internal Revenue Bulletin 1996-43 (PDF rendition): IRS Announcements

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

INCOME TAX
Rev. Rul. 96–51, page 5.
Taxes, accrual of deduction.Under the all events test
of section 461 of the Code, an accrual method employer
may deduct in Year 1 its otherwise deductible FICA and
FUTA taxes imposed with respect to year-end wages
properly accrued in Year 1, but paid in Year 2, if the
requirements of the recurring item exception are met.
P.L. 104–191, page 7.
An Act to amend the Internal Revenue Code of 1996, to
improve portability and continuity of health insurance
coverage in the group and individual markets and to
promote the use of medical savings accounts, is repro-
duced.
EMPLOYEE PLANS
Rev. Proc. 96–49, page 74.
Retirement plans; section 414(u); model amend-
ments.This procedure describes how certain plan
sponsors may adopt model amendments to amend their
plans to comply with the requirements of the Uniformed
Services Employment and Reemployment Rights Act of
1994, P. L. 103–353, and section 414(u) of the Code,
which was added by section 1704(n) of the Small
Business Job Protection Act of 1996, P. L. 104–188.
EXEMPT ORGANIZATIONS
Announcement 96–109, page 76.
A list is given of organizations now classified as private
foundations.
ADMINISTRATIVE
Announcement 96–110, page 77.
Corporations and partnerships will not automatically
receive Package 1120 or 1065 for 1996. Instead, they
will receive a postcard and may order either package if
necessary.
Finding Lists begin on page 79.
Announcement Relating to Court Decisions, on page 4.
Announcement of Declaratory Judgment Proceedings Under Section 7428, on page 77.
Bulletin No. 1996–43
October 21, 1996
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be relied
upon as authoritative interpretations.

Mission of the Service
The purpose of the Internal Revenue Service is to
collect the proper amount of tax revenue at the least
cost; serve the public by continually improving the
quality of our products and services; and perform in a
manner warranting the highest degree of public
confidence in our integrity, efficiency and fairness.
Statement of Principles
of Internal Revenue
Tax Administration
The function of the Internal Revenue Service is to
administer the Internal Revenue Code. Tax policy
for raising revenue is determined by Congress.
With this in mind, it is the duty of the Service to
carry out that policy by correctly applying the laws
enacted by Congress; to determine the reasonable
meaning of various Code provisions in light of the
Congressional purpose in enacting them; and to
perform this work in a fair and impartial manner,
with neither a government nor a taxpayer point of view.
At the heart of administration is interpretation of the
Code. It is the responsibility of each person in the
Service, charged with the duty of interpreting the
law, to try to find the true meaning of the statutory
provision and not to adopt a strained construction in
the belief that he or she is ‘‘protecting the revenue.’’
The revenue is properly protected only when we as-
certain and apply the true meaning of the statute.
The Service also has the responsibility of applying
and administering the law in a reasonable,
practical manner. Issues should only be raised by
examining officers when they have merit, never
arbitrarily or for trading purposes. At the same
time, the examining officer should never hesitate
to raise a meritorious issue. It is also important
that care be exercised not to raise an issue or to
ask a court to adopt a position inconsistent with
an established Service position.
Administration should be both reasonable and
vigorous. It should be conducted with as little
delay as possible and with great courtesy and
considerateness. It should never try to overreach,
and should be reasonable within the bounds of law
and sound administration. It should, however, be
vigorous in requiring compliance with law and it
should be relentless in its attack on unreal tax
devices and fraud.
2

Introduction
The Internal Revenue Bulletin is the authoritative instru-
ment of the Commissioner of Internal Revenue for
announcing official rulings and procedures of the Inter-
nal Revenue Service and for publishing Treasury Deci-
sions, Executive Orders, Tax Conventions, legislation,
court decisions, and other items of general interest. It is
published weekly and may be obtained from the Superin-
tendent of Documents on a subscription basis. Bulletin
contents of a permanent nature are consolidated semi-
annually into Cumulative Bulletins, which are sold on a
single-copy basis.
It is the policy of the Service to publish in the Bulletin all
substantive rulings necessary to promote a uniform
application of the tax laws, including all rulings that
supersede, revoke, modify, or amend any of those
previously published in the Bulletin. All published rulings
apply retroactively unless otherwise indicated. Proce-
dures relating solely to matters of internal management
are not published; however, statements of internal
practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Ser-
vice on the application of the law to the pivotal facts
stated in the revenue ruling. In those based on positions
taken in rulings to taxpayers or technical advice to
Service field offices, identifying details and information
of a confidential nature are deleted to prevent unwar-
ranted invasions of privacy and to comply with statutory
requirements.
Rulings and procedures reported in the Bulletin do not
have the force and effect of Treasury Department
Regulations, but they may be used as precedents.
Unpublished rulings will not be relied on, used, or cited
as precedents by Service personnel in the disposition of
other cases. In applying published rulings and proce-
dures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be consid-
ered, and Service personnel and others concerned are
cautioned against reaching the same conclusions in
other cases unless the facts and circumstances are
substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on
provisions of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows:
Subpart A, Tax Conventions, and Subpart B, Legislation
and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to
these subjects are contained in the other Parts and
Subparts. Also included in this part are Bank Secrecy
Act Administrative Rulings. Bank Secrecy Act Administra-
tive Rulings are issued by the Department of the
Treasury’s Office of the Assistant Secretary (Enforce-
ment).
Part IV.—Items of General Interest.
With the exception of the Notice of Proposed Rulemak-
ing and the disbarment and suspension list included in
this part, none of these announcements are consoli-
dated in the Cumulative Bulletins.
The first Bulletin for each month includes an index for
the matters published during the preceding month.
These monthly indexes are cumulated on a quarterly and
semiannual basis, and are published in the first Bulletin
of the succeeding quarterly and semi-annual period,
respectively.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents U.S. Government Printing Office, Washington, D.C. 20402.
3

Announcement Relating to Court Decisions
It is the policy of the Internal Rev-
enue Service to announce at an early
date whether it will follow the holdings
in certain cases. An Action on Decision
is the document making such an an-
nouncement. An Action on Decision will
be issued at the discretion of the Service
only on unappealed issues decided ad-
verse to the government. Generally, an
Action on Decision is issued where its
guidance would be helpful to Service
personnel working with the same or
similar issues. Unlike a Treasury Regu-
lation or a Revenue Ruling, an Action
on Decision is not an affirmative state-
ment of Service position. It is not
intended to serve as public guidance and
may not be cited as precedent.
Actions on Decisions shall be relied
upon within the Service only as conclu-
sions applying the law to the facts in the
particular case at the time the Action on
Decision was issued. Caution should be
exercised in extending the recommenda-
tion of the Action on Decision to similar
cases where the facts are different.
Moreover, the recommendation in the
Action on Decision may be superseded
by new legislation, regulations, rulings,
cases, or Actions on Decisions.
Prior to 1991, the Service published
acquiescence or nonacquiescence only in
certain regular Tax Court opinions. The
Service has expanded its acquiescence
program to include other civil tax cases
where guidance is determined to be
helpful. Accordingly, the Service now
may acquiesce or nonacquiesce in the
holdings of memorandum Tax Court
opinions, as well as those of the United
States District Courts, Claims Court, and
Circuit Courts of Appeal. Regardless of
the court deciding the case, the recom-
mendation of any Action on Decision
will be published in the Internal Rev-
enue Bulletin.
The recommendation in every Action
on Decision will be summarized as
acquiescence, acquiescence in result
only, or nonacquiescence. Both “acqui-
escence” and “acquiescence in result
only” mean that the Service accepts the
holding of the court in a case and that
the Service will follow it in disposing of
cases with the same controlling facts.
However, “acquiescence” indicates nei-
ther approval nor disapproval of the
reasons assigned by the court for its
conclusions; whereas, “acquiescence in
result only” indicates disagreement or
concern with some or all of those
reasons. Nonacquiescence signifies that,
although no further review was sought,
the Service does not agree with the
holding of the court and, generally, will
not follow the decision in disposing of
cases involving other taxpayers. In refer-
ence to an opinion of a circuit court of
appeals, a nonacquiescence indicates
that the Service will not follow the
holding on a nationwide basis. However,
the Service will recognize the
precedential impact of the opinion on
cases arising within the venue of the
deciding circuit.
The announcements published in the
weekly Internal Revenue Bulletins are
consolidated semiannually and annually.
The semiannual consolidation appears in
the first Bulletin for July and in the
Cumulative Bulletin for the first half of
the year, and the annual consolidation
appears in the first Bulletin for the
following January and in the Cumulative
Bulletin for the last half of the year.
The Commissioner ACQUIESCES in
the following decisions:
Burlington Northern Railroad Co. v.
Commissioner,
1
82 T.C. 143 (1984)
Eastman Kodak Co. v. United States,
2
534 F.2d 252 (Ct. Cl. 1976)
Velinsky v. Commissioner,
3
T.C. Memo 1996–180
The Commissioner does NOT AC-
QUIESCE the following decision:
Brown Group, Inc. v. Commissioner,
4
77 F.3d 217 (8th Cir. 1996)
vacating and remanding104 T.C. 105
(1995)
1
Acquiescence and that Rev. Rul. 74–70 be recon-
sidered relating to whether an accrual basis tax-
payer may deduct, pursuant to the all events test
of section 1.461–1(a)(2) of the Treasury Regula-
tions, the employer’s portion of payroll taxes on
year-end salaries where the salaries are properly
accruable but unpaid at year-end and the obliga-
tion to remit the taxes does not arise until the
following year when such wages are paid to
employees.
2
Acquiescence and that Rev. Rul. 74–70 be recon-
sidered relating to whether an accrual basis tax-
payer may deduct, pursuant to the all events test
of section 1.461–1(a)(2) of the Treasury Regula-
tions, the employer’s portion of payroll taxes on
year-end salaries where the salaries are properly
accruable but unpaid at year-end and the obliga-
tion to remit the taxes does not arise until the
following year when such wages are paid to
employees.
3
Acquiescence relating to whether, for purposes of
the grossly erroneous requirement of section
6013(e) of the Code, an adjustment to cost of
goods sold (COGS) is an omission of gross
income or an item of “deduction, credit, or basis.”
4
Nonacquiescence relating to whether a controlled
foreign corporation’s (“CFC’s”) distributive share
of partnership income is foreign base company
sales income under section 954(d) of the Code,
when the partnership income is earned under
circumstances in which it would have been foreign
base company sales income if earned directly by
the CFC partner.
4

Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Section 461.—General Rule for
Taxable Year of Deduction
26 CFR 1.461–1: General rule for taxable year of
deduction.
(Also § 1.461–5.)
Taxes, accrual of deduction.Under
the all events test of section 461 of the
Code, an accrual method employer may
deduct in Year 1 its otherwise deductible
FICA and FUTA taxes imposed with
respect to year-end wages properly ac-
crued in Year 1, but paid in Year 2, if
the requirements of the recurring item
exception are met.
Rev. Rul. 96–51
ISSUE
Under the all events test of § 461 of
the Internal Revenue Code, may an
accrual method employer deduct in Year
1 its otherwise deductible Federal Insur-
ance Contributions Act (FICA) and Fed-
eral Unemployment Tax Act (FUTA)
taxes imposed with respect to year-end
wages properly accrued in Year 1, but
paid in Year 2?
FACTS
X, a corporation, employs the accrual
method of accounting and uses a cal-
endar taxable year.Xpays otherwise
deductible wages to its employees bi-
weekly on the Friday immediately fol-
lowing a two-week pay period. Wages
for the pay period beginning Saturday,
December 23, 1995, and ending Friday,
January 5, 1996, were paid toX’s
employees on Friday, January 12, 1996.
Prior to filing its 1995 corporate federal
income tax return on March 15, 1996,X
paid the taxes owed under §§ 3111 (the
employer’s share of FICA taxes) and
3301 (FUTA taxes) with respect to the
December 23–31, 1995 wages thatX
properly accrued in 1995.Xproperly
adopted the recurring item exception
under § 1.461–5 of the Income Tax
Regulations as a method of accounting
with respect toX’s recurring liability for
its share of FICA and FUTA taxes
imposed in connection with accrued but
unpaid year-end wages. On its 1995
return,Xdeducted the FICA and FUTA
taxes it paid on the accrued year-end
wages.
LAW AND ANALYSIS
Section 461(a) provides that the
amount of any deduction or credit must
be taken for the taxable year that is the
proper taxable year under the method of
accounting used in computing taxable
income.
Section 461(h) and § 1.461–1(a)(2)(i)
provide that, under the accrual method
of accounting, a liability is incurred, and
is generally taken into account for fed-
eral income tax purposes, in the taxable
year in which (1) all the events have
occurred that establish the fact of the
liability, (2) the amount of the liability
can be determined with reasonable accu-
racy, and (3) economic performance has
occurred with respect to the liability.
The economic performance requirement
applies to liabilities allowable as a de-
duction or otherwise incurred after July
18, 1984.
Section 1.461–4(g)(6) provides gener-
ally that, if a taxpayer is liable to pay a
tax, economic performance occurs as the
tax is paid to the governmental authority
that imposed it.
Section 1.461–5 provides a recurring
item exception to the general rule of
economic performance. Under the recur-
ring item exception, a liability is treated
as incurred for a taxable year if: (1) at
the end of the taxable year, all events
have occurred that establish the fact of
the liability and the amount can be
determined with reasonable accuracy;
(2) economic performance occurs on or
before the earlier of (a) the date that the
taxpayer timely files a return (including
extensions), or (b) the 15th day of the
ninth calendar month after the close of
the taxable year; (3) the liability is
recurring in nature; and (4) either the
amount of the liability is not material or
accrual of the liability in the earlier year
results in a better matching of the
liability against the income to which it
relates.
Section 1.461–5(b)(5)(ii) provides
that, in the case of a liability for taxes,
the matching requirement of the recur-
ring item exception is deemed satisfied.
Rev. Rul. 74–70, 1974–1 C.B. 116,
holds that, under the all events test, an
accrual basis employer generally may
not deduct its share of FICA taxes
payable with respect to wages accrued
but unpaid at year-end until the taxable
year in which those wages are actually
or constructively paid.
InEastman Kodak Co. v. United
States, 534 F.2d 252 (Ct. Cl. 1976),
acq., this Bulletin, page 4, the court
held that an accrual basis employer may
deduct its share of FICA, FUTA, and
state unemployment taxes with respect
to year-end wages in the year the wages
were accrued, rather than in the follow-
ing year when the wages were paid. The
court held that, under the all events test,
the fact of the liability may be estab-
lished, and the amount thereof reason-
ably ascertained, even though no legally
enforceable obligation to pay the taxes
in issue had arisen by year-end. The
court found that the fact of the employ-
er’s liability for the taxes was estab-
lished as an automatic consequence of
its definite and legal obligation to pay
the underlying year-end accrued wages.
See also Burlington Northern R.R. v.
Commissioner, 82 T.C. 143 (1984),acq.
this Bulletin, page 4 (reaching the same
conclusion on the deductibility of the
§ 3221 employer tax under the Railroad
Retirement Tax Act with respect to
accrued year-end wages).
Similarly,Xsatisfied the all events
test for the federal employment taxes
imposed with respect to accrued year-
end wages for 1995 because the fact of
its liability to pay those taxes was
established as an automatic consequence
of its accrual of the underlying wages
and the amount of those taxes was
reasonably ascertainable. Further,Xsat-
isfied the requirements of the recurring
item exception because the all events
test was satisfied by the end of 1995,
economic performance occurred within
the prescribed time because the taxes
were paid prior to the filing ofX’s 1995
return, the liability was recurring in
nature, and the accrual of the tax liabil-
ity in 1995 is deemed (under § 1.461–
5(b)(5)(ii)) to result in a better matching
of that liability against the income to
which it relates. Accordingly,Xmay
deduct on its 1995 return the FICA and
FUTA taxes it paid on the accrued
year-end wages.
HOLDING
Under the all events test of § 461, an
accrual method employer may deduct in
Year 1 its otherwise deductible FICA
and FUTA taxes imposed with respect to
year-end wages properly accrued in Year
1, but paid in Year 2, provided the
employer satisfies the requirements of
the recurring item exception with re-
spect to these taxes.
EFFECT ON OTHER DOCUMENTS
Rev. Rul. 74–70 is revoked.
5

APPLICATION
The tax treatment of an employer’s
FICA and FUTA taxes with respect to
year-end wages within the scope of this
revenue ruling constitutes a method of
accounting. An employer currently treat-
ing those taxes in a manner different
from that provided in this revenue ruling
must seek the Commissioner’s consent to
change its method of accounting. A
change in method of accounting for those
taxes is a change in method of account-
ing to which §§ 446(e) and 481 apply.
This change in method of accounting
must be made in accordance with Rev.
Proc. 92–20, 1992–1 C.B. 685.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Barry M. Freiman of the Office
of Assistant Chief Counsel (Income Tax
and Accounting). For further information
regarding this revenue ruling, contact
Mr. Freiman at (202) 622–4950 (not a
toll-free call).
6

Part II. Treaties and Tax Legislation
Subpart B.—Legislation and Related Committee Reports
Public Law 104–191
104th Congress, H.R. 3103
1
August 21, 1996
An Act to amend the Internal Revenue Code of 1986 to improve
portability and continuity of health insurance coverage in the group and
individual markets, to combat waste, fraud, and abuse in health insurance
and health care delivery, to promote the use of medical savings accounts, to
improve access to long-term care services and coverage, to simplify the
administration of health insurance, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
******
1
This publication of the law is restricted to excerpts involving tax matters.
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Part III. Administrative, Procedural, and Miscellaneous
26 CFR 601.201: Rulings and determination let-
ters.
Rev. Proc. 96–49
SECTION 1. PURPOSE
This revenue procedure provides a
model amendment that will give plan
sponsors a streamlined way to amend
their plans to comply with the require-
ments of the Uniformed Services Em-
ployment and Reemployment Rights Act
of 1994, Pub. L. No. 103–353
(‘‘USERRA’’), and § 414(u) of the In-
ternal Revenue Code. The revenue pro-
cedure also provides that plan amend-
ments to reflect the provisions of
USERRA and § 414(u) generally will
not be required to be made before 1998.
Section 414(u) was added by § 1704(n)
of the Small Business Job Protection
Act of 1996, Pub. L. No. 104–188
(‘‘SBJPA’’). The model amendment is
available for use by sponsors of master
or prototype (‘‘M&P’’), regional proto-
type, volume submitter specimen, indi-
vidually designed, and simplified em-
ployee pension (‘‘SEP’’) plans that have
received favorable opinion, notification,
advisory, ruling, or determination letters
that take into account the requirements
of the Tax Reform Act of 1986, Pub. L.
No. 99–514 (‘‘TRA ’86’’).
SECTION 2. BACKGROUND AND
GENERAL INFORMATION
.01 USERRA, codified at 38 U.S.C.
§§ 4301–4333, revised and restated the
federal law protecting veterans’ reem-
ployment rights. Under USERRA, which
is interpreted and enforced by the Veter-
ans’ Employment and Training Service
of the U.S. Department of Labor, an
employee who is absent from a position
with an employer because of military
service generally is entitled to reemploy-
ment with that employer, subject to
certain limits and exceptions. USERRA
also requires certain other rights and
benefits to be provided or made avail-
able, including, in certain circumstances,
coverage under the employer’s health
plan. In addition, on reemployment, an
employee is entitled to receive certain
pension, profit-sharing and similar ben-
efits (under defined benefit or defined
contribution plans) that would have been
received but for the employee’s absence
during military service. USERRA sets
forth various rules relating to the em-
ployee’s reemployment and other rights
and benefits, including—
•the types of military service cov-
ered,
•advance notice of military service
to be given to an employer,
•documentation of reemployment
eligibility,
•exceptions for dishonorable dis-
charge and employer hardship,
•the position in which an individual
must be reemployed, and
•enforcement procedures.
.02 Section 414(u) generally provides
that a contribution that is made by an
employer or employee to an individual
account plan or by an employee to a
contributory defined benefit plan, and
that is required under USERRA, is taken
into account for purposes of the limita-
tions of § 402(g), 402(h), 403(b),
404(a), 404(h), 408, 415 or 457 in the
year to which the contribution relates,
not the year in which the contribution is
made. In addition, § 414(u) provides
that a plan is not treated as failing to
meet the requirements of § 401(a)(4),
401(a)(26), 401(k)(3), 401(k)(11), 401-
(k)(12), 401(m), 403(b)(12), 408(k)(3),
408(k)(6), 408(p), 410(b), or 416 be-
cause of the contribution (or the right to
make the contribution).
.03 Section 414(u) generally provides
that an employer maintaining a plan
shall be treated as meeting the require-
ments of USERRA only if an employee
reemployed under USERRA is treated as
not having incurred a break in service
because of the period of military ser-
vice, the employee’s military service is
treated as service with the employer for
vesting and benefit accrual purposes, the
employee is permitted to make addi-
tional elective deferrals and employee
contributions in an amount not exceed-
ing the maximum amount the employee
would have been permitted or required
to contribute during the period of mili-
tary service if the employee had actually
been employed by the employer during
that period (‘‘make-up contributions’’),
and the employee is entitled to any
accrued benefits that are contingent on
employee contributions or elective de-
ferrals to the extent the employee pays
the contributions or elective deferrals to
the plan. Make-up contributions must be
permitted during the period that begins
on the date of reemployment and contin-
ues for five years or, if less, three times
the period of military service. With
respect to make-up contributions, the
employer must make matching contribu-
tions that would have been required if
the make-up contributions had actually
been made during the period of military
service.
.04 Section 414(u) provides that an
employee is treated as receiving com-
pensation from the employer during the
period of military service equal to the
compensation the employee otherwise
would have received from the employer
during that period, or, if the compensa-
tion the employee otherwise would have
received is not reasonably certain, the
employee’s average compensation from
the employer during the period immedi-
ately preceding the period of military
service. For purposes of § 414(u),
USERRA is not treated as requiring the
crediting of earnings to an employee
with respect to any contribution before
the contribution is actually made or
requiring any allocation of forfeitures to
the employee for the period of military
service. Section 414(u) also provides
that, if a plan provides for the suspen-
sion of an employee’s obligation to
repay a loan for any part of any period
of military service, the suspension is not
taken into account for purposes of
§ 72(p), 401(a) or 4975(d)(1).
.05 USERRA provides generally that
it is effective with respect to reemploy-
ments initiated 60 days or more after the
October 13, 1994, enactment date of
USERRA, that is, reemployments initi-
ated on or after December 12, 1994.
USERRA provides that an employee
pension benefit plan has two years from
the date of enactment, that is, until
October 13, 1996, to come into compli-
ance. Section 1704(n)(3) of SBJPA pro-
vides that § 414(u) is effective as of
December 12, 1994. The relief provided
by § 414(u) extends to plans that are
not operated in compliance with the
requirements of USERRA specified in
§ 414(u) until after October 12, 1996,
as well as to plans that were operated in
compliance with those requirements be-
fore October 13, 1996.
.06 Provisions of SBJPA that are un-
related to USERRA changed various
qualification requirements for plans.
Section 1465 of SBJPA provides that, if
a plan amendment is required by certain
changes under SBJPA (‘‘SBJPA
change’’), the amendment is not re-
quired to be made before the first day of
the first plan year beginning on or after
January 1, 1998 (January 1, 2000, for a
governmental plan as defined in
74

§ 414(d) of the Code), if the plan is
operated in accordance with the SBJPA
change during the period from the effec-
tive date of the SBJPA change to the
time the plan amendment is required
and if the plan amendment reflecting the
SBJPA change applies retroactively to
that period.
.07 Plan amendments to reflect the
provisions of USERRA and § 414(u)
will not be required to be made before
the date plan amendments will be re-
quired to be made under § 1465 of
SBJPA.
SECTION 3. MODEL AMENDMENT
.01 All plans—Sponsors described in
subsection .02 may amend their plans by
adopting, word-for-word, the model lan-
guage in the appendix to this revenue
procedure in accordance with the in-
structions in this revenue procedure. If a
sponsor to whom the model language is
available pursuant to subsection .02
adopts the model language, neither ap-
plication to the Service nor a user fee is
required. The Service will not issue new
opinion, notification, advisory, ruling, or
determination letters for plans that are
amended solely to add the model lan-
guage described in this section.
.02 The model language is available
only to sponsors of M&P, regional pro-
totype, volume submitter specimen, and
individually designed (including volume
submitter and SEP) plans that, as of the
date of the adoption of the model
amendment, have reliance on a favor-
able opinion, notification, advisory, rul-
ing, or determination letter that takes
into account the requirements of TRA
’86 under Rev. Proc. 87–50, 1987–2
C.B. 647, as modified; Rev. Proc. 89–9,
1989–1 C.B. 780, as modified; Rev.
Proc. 89–13, 1989–1 C.B. 801, as modi-
fied; Rev. Proc. 90–20, 1990–1 C.B.
495; Rev. Proc. 91–41, 1991–2 C.B.
697; Rev. Proc. 91–66, 1991–2 C.B.
870; Rev. Proc. 93–39, 1993–2 C.B.
513; or Rev. Proc. 96–6, 1996–1 I.R.B.
151.
.03 M&P, Regional Prototype and
Volume Submitter Plans—M&P, re-
gional prototype and volume submitter
plan sponsors that use the model lan-
guage must file Form 8837, Notice of
Adoption of Revenue Procedure Model
Amendments.
SECTION 4. RELIANCE
An employer entitled to rely on an
opinion, notification, ruling, or determi-
nation letter will not lose reliance on the
letter merely because of this amend-
ment. Plan amendments made in accor-
dance with section 2.07 and section 3 of
this revenue procedure will not cause
the plan to lose its otherwise applicable
extended reliance period under Rev.
Procs. 89–9 and 89–13, as modified by
Rev. Proc. 93–9, 1993–1 C.B. 474, or
section 13 of Rev. Proc. 93–39.
DRAFTING INFORMATION
The principal author of this revenue
procedure is Richard Wright of the
Employee Plans Division. For further
information regarding this revenue pro-
cedure, contact the Employee Plans Di-
vision’s telephone assistance service be-
tween 1:30 and 4:00 p.m., Eastern Time,
Monday through Thursday at (202) 622–
6074/6075 or Mr. Wright at (202) 622–
6214. (These telephone numbers are not
toll-free numbers.)
For further information regarding
USERRA, contact the local office of the
Veterans’ Employment and Training Ser-
vice (‘‘VETS’’) of the U.S. Department
of Labor or contact the VETS National
Office at 1–202–219–8611.
APPENDIX
MODEL AMENDMENTS
AMENDMENT 1
(Note to Sponsor: The following model
amendment may be used to amend plans
to provide for the requirements of
USERRA and § 414(u) of the Code.)
‘‘Notwithstanding any provision of this
plan to the contrary, contributions, ben-
efits and service credit with respect to
qualified military service will be pro-
vided in accordance with § 414(u) of
the Internal Revenue Code.’’
AMENDMENT 2
(Note to Sponsor: The following model
amendment may be used to amend plans
that provide for loans to participants, if
the sponsor chooses to suspend loan
repayments during participants’ periods
of military service.)
‘‘Loan repayments will be suspended
under this plan as permitted under
§ 414(u)(4) of the Internal Revenue
Code.’’
75

Part IV. Items of General Interest
Foundations Status of Certain
Organizations
Announcement 96–109
The following organizations have
failed to establish or have been unable
to maintain their status as public chari-
ties or as operating foundations. Accord-
ingly, grantors and contributors may not,
after this date, rely on previous rulings
or designations in the Cumulative List
of Organizations (Publication 78), or on
the presumption arising from the filing
of notices under section 508(b) of the
Code. This listing doesnotindicate that
the organizations have lost their status
as organizations described in section
501(c)(3), eligible to receive deductible
contributions.
Former Public Charities. The follow-
ing organizations (which have been
treated as organizations that are not
private foundations described in section
509(a) of the Code) are now classified
as private foundations:
Accessibly Fun Resort and Campground
Inc., Bloomington, MN
Ambulance Rescue 33 LTD, Chillicothe,
IL
American Association of University
Women North Shore Memorial,
Chicago, IL
American Export Worldwide,
Washington, DC
Androy Project Committee, Hibbing,
MN
Anxiety Control Techniques, Tinley
Park, IL
Apple Retreat Ministries, New Prague,
MN
Archeological Institute of America Minn
Society Inc., Minneapolis, MN
Arrowhead Wilderness Camps Inc.,
Highland Park, IL
ASI-Jamestown Inc., St. Paul, MN
Aspects and Expectations Inc., Madison,
WI
Big Bend Vernon Historical Society
Inc., Big Bend, WI
Bonduel Community Archives Inc.,
Bonduel, WI
Bradley Sigma Phi Historical Landmark,
Madison, WI
California Acupuncture Resources Inc.,
San Leandro, CA
Cambridge Productions, Chicago, IL
Cameron Senior Citizens, Cameron, WI
Carbondale Community Orchestra Inc.,
Carbondale, IL
Casa Guatemala, Chicago, IL
Cascade Community Food Cupboard,
Cascade, MT
Center for Development of Hardy
Landscape Plants Inc., Chanhassen
MN
Charles Restoration Mission, Detroit, MI
Chicago Numisatic Foundation Rare
Coin Museum & Library Inc.,
Chicago, IL
Childrens Kidney Disease Society
CKDS, Minneapolis, MN
Christian Bridge, Palos Heights, IL
Christian Health Association of Liberia
Support Group, Aurora, IL
Christy Lynn Schaeffer Memorial
Scholarship Fund LTD, Wolf Lake, IL
Columbia Park Tower Fund Inc.,
Malone, WI
Commonwealth Development
Corporation, Inc., Detroit, MI
Community Support Systems, Chicago,
IL
Concern for Car Owners Inc., Okemos,
MI
Cultural & Educational Productions
Association, Homewood, IL
Dale Mahnke Musical Ministries,
Shelbyville, IL
Diocese of Chicago Housing
Development Corporation, Chicago,
IL
District 637 Foundation, Redwood Falls,
MN
Don Irwin Ministries Inc., Minneapolis,
MN
Douglas Mental Health Foundation Inc.,
Viroqua, WI
Dr. Jakub G. Schlichter Research
Foundation, Chicago, IL
E. F. Jablonski Family Foundation Inc.,
Wausau, WI
Employment Awareness Resources,
Broadview, IL
Environmental Advisory Group, Inc.,
Florence, AL
Evensong Foundation, Chicago, IL
Express Learning Center Inc., Chicago,
IL
Family Drozdz-Czerkawski Foundation,
Chicago, IL
Farrington Company, Inc., New York,
NY
Illinois Association for Gifted Children,
Glenview, IL
Illinois Society of Fire Service
Instructors, Oak Lawn, IL
Institute for Child and Family,
Milwaukee, WI
Institute for World Resource Research,
Woodbridge, IL
Janesville Youth Football Inc.,
Janesville, WI
J. Hawk Aquatic Club Inc., Whitewater,
WI
Joan Vaala Memorial Trust, Madison,
MN
John P. Loftus Scholarship Fund,
Chicago, IL
Lake County Knights Inc., Wildwood,
IL
Lee County Drug Dependency
Rehabilitation Center, Inc., Tupelo,
MS
Lewis and Clark International Ayh
Hostel, St. Charles, MO
Marbleworks Theatre, Chicago, IL
Mather Health Care Inc., Evanston, IL
Maumee Valley-Wabash & Erie Canal
Historical Society Incorporated,
Woodburn, IN
Maywood Renaissance Center Inc.,
Maywood, IL
Mt. Pulaski Community Unit District
No. 23 Education FDTN, Mt. Pulaski,
IL
National Black Caucus of Special
Educators, Chicago, IL
National Writers Uplink, Danville, IL
New Vision of Faith Development
Corporation, Chicago, IL
New World Repertory Company,
Chicago, IL
Orpheus of America, Chicago, IL
Pace Group, Inc., Wisconsin Rapids, WI
Pro Education Inc., Palos Hills, IL
Pro Hispanic Political Educational
Project Inc., Paoli, PA
Projected Images of Hudson County,
Hoboken, NJ
Project Redemption, Reamstown, PA
Project 2000 Plus Inc., Frederick, MD
Quantum Group, Minneapolis, MN
Rabbi Benjamin Steinberg Education
Fund Inc., Baltimore, MD
Raft Inc., Washington, PA
Reach Out 56 Inc., Philadelphia, PA
Sakhisizwe Christian Ministries of South
Africa Inc., Westminster, MD
San Pedro Maritime Heritage Museum,
Wilmington, CA
Schuyler Jail Museum Inc., Rushville,
IL
Search and Rescue Dogs of Maryland
Inc., Waldorf, MD
Senri International School Foundation
Inc., Princeton, NJ
Serenity House Inter-Island
Neighborhood Endowment, St.
Thomas, VI
Sexual Abuse & Addiction Treatment
Foundation Inc., Frederick, MD
Shakespeare Guild Incorporated,
Washington, DC
Shelter Project, Alexandria, VA
761996-43 I.R.B.

Shenandoah Fellowship Ministries,
McLean, VA
Tri City Tennis Association Inc.,
Marinette, WI
Union City Volunteer Fire Department,
Union City, PA
United Filipino Americans of Lake
County, Winthrop Harbor, IL
United States Chinese Kuoshu
Federation Inc., Towson, MD
United States Go Foundation, Inc., New
York, NY
University of Hull American
Foundation, Washington, DC
U.S. Council for International
Rehabilitation, Washington, DC
U.S. Knowhow Inc., Elmhurst, IL
Utilization Review Accreditation
Commission Inc., Washington, DC
Vesta Foundation Inc., Adelphi, MD
Vietnam Era Veterans Inter-Tribal
Assoc-Womens Auxiliary Inc.,
Germantown, MD
Village Theatre Company, Inc., New
York, NY
Virginia Center for Public Press Inc.,
Richmond, VA
Virginia Network for Victims and
Witnesses of Crime Inc., Alexandria,
VA
Virginians in Partnership for Housing
Inc., Mt. Vernon, VA
Vital Foundation, Pittsburgh, PA
Vivant Institute, Inc., New York, NY
Ward 8 Forum on Education,
Washington, DC
Warrior Run Lady Defender Basketball
Parents and Boosters AS, Turbotville,
PA
Washingtons Child Project, Washington,
DC
If an organization listed above sub-
mits information that warrants the re-
newal of its classification as a public
charity or as a private operating founda-
tion, the Internal Revenue Service will
issue a ruling or determination letter
with the revised classification as to
foundation status. Grantors and contribu-
tors may thereafter rely upon such rul-
ing or determination letter as provided
in section 1.509(a)–7 of the Income Tax
Regulations. It is not the practice of the
Service to announce such revised classi-
fication of foundation status in the Inter-
nal Revenue Bulletin.
New Form 8160–A, Form
1120/1120–A Tax Package
Postcard, and New Form 8160–C,
Form 1065 Package Postcard
Announcement 96–110
The 1996 Package 1120 (U.S. Corpo-
ration Income Tax Package) and the
1996 Package 1065 (U.S. Partnership
Return of Income) will not be mailed
automatically to prior year filers of
Forms 1120, 1120–A, or 1065 with U.S.
addresses. Instead, filers of these returns
for 1995 will be sent a postcard (Form
8160–A for corporations or Form
8160–C for partnerships), which will
include the pre-printed label to be used
with the 1996 return. Corporations or
partnerships that need a 1996 package
can order it by returning the postpaid
reply portion of the postcard.
Notice of Disposition of Declaratory
Judgment Proceedings Under
Section 7428
This announcement serves notice to
potential donors that on August 20,
1996, the United States Tax Court en-
tered an Order of Dismissal in reponse
to the parties’ Joint Motion to Dismiss
for Mootness. The Court agreed that the
revocation notice is null and void and
the organizations listed below are to be
recognized as tax exempt under section
501(c)(3) of the Internal Revenue Code.
Greater Damascus Baptist Church
Dayton, OH
Philippi Missionary Baptist Church
Dayton, OH
771996-43 I.R.B.

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as ‘‘rulings’’)
that have an effect on previous rulings
use the following defined terms to de-
scribe the effect:
Amplifieddescribes a situation where
no change is being made in a prior
published position, but the prior position
is being extended to apply to a variation
of the fact situation set forth therein.
Thus, if an earlier ruling held that a
principle applied to A, and the new
ruling holds that the same principle also
applies to B, the earlier ruling is ampli-
fied. (Compare withmodified, below).
Clarifiedis used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an es-
sential difference between them.
Modifiedis used where the substance
of a previously published position is
being changed. Thus, if a prior ruling
held that a principle applied to A but not
to B, and the new ruling holds that it
applies to both A and B, the prior ruling
is modified because it corrects a pub-
lished position. (Compare withamplified
andclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered de-
terminative with respect to future trans-
actions. This term is most commonly
used in a ruling that lists previously
published rulings that are obsoleted be-
cause of changes in law or regulations.
A ruling may also be obsoleted because
the substance has been included in regu-
lations subsequently adopted.
Revokeddescribes situations where
the position in the previously published
ruling is not correct and the correct
position is being stated in the new
ruling.
Supersededdescribes a situation
where the new ruling does nothing more
than restate the substance and situation
of a previously published ruling (or
rulings). Thus, the term is used to
republish under the 1986 Code and
regulations the same position published
under the 1939 Code and regulations.
The term is also used when it is desired
to republish in a single ruling a series of
situations, names, etc., that were previ-
ously published over a period of time in
separate rulings. If the new ruling does
more than restate the substance of a
prior ruling, a combination of terms is
used. For example,modifiedandsuper-
sededdescribes a situation where the
substance of a previously published rul-
ing is being changed in part and is
continued without change in part and it
is desired to restate the valid portion of
the previously published ruling in a new
ruling that is self contained. In this case
the previously published ruling is first
modified and then, as modified, is su-
perseded.
Supplementedis used in situations in
which a list, such as a list of the names
of countries, is published in a ruling and
that list is expanded by adding further
names in subsequent rulings. After the
original ruling has been supplemented
several times, a new ruling may be
published that includes the list in the
original ruling and the additions, and
supersedes all prior rulings in the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current use and
formerly used will appear in material published in
the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C.—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contribution Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
78

Numerical Finding List
1
Bulletins 1996–27 through 1996–42
Announcements:
96–61, 1996–27 I.R.B.72
96–62, 1996–28 I.R.B.55
96–63, 1996–29 I.R.B.18
96–64, 1996–29 I.R.B.18
96–65, 1996–29 I.R.B.18
96–66, 1996–29 I.R.B.19
96–67, 1996–30 I.R.B.27
96–68, 1996–31 I.R.B.45
96–69, 1996–32 I.R.B.38
96–70, 1996–32 I.R.B.40
96–71, 1996–33 I.R.B.16
96–72, 1996–33 I.R.B.16
96–73, 1996–33 I.R.B.18
96–74, 1996–33 I.R.B.19
96–75, 1996–34 I.R.B.29
96–76, 1996–34 I.R.B.29
96–77, 1996–35 I.R.B.15
96–78, 1996–35 I.R.B.15
96–79, 1996–35 I.R.B.15
96–80, 1996–35 I.R.B.16
96–81, 1996–36 I.R.B.13
96–82, 1996–36 I.R.B.14
96–83, 1996–36 I.R.B.14
96–84, 1996–36 I.R.B.14
96–85, 1996–37 I.R.B.20
96–86, 1996–37 I.R.B.21
96–87, 1996–37 I.R.B.21
96–88, 1996–38 I.R.B.150
96–89, 1996–37 I.R.B.22
96–90, 1996–37 I.R.B.22
96–91, 1996–37 I.R.B.23
96–92, 1996–38 I.R.B.151
96–93, 1996–38 I.R.B.151
96–94, 1996–38 I.R.B.153
96–96, 1996–39 I.R.B.41
96–97, 1996–39 I.R.B.41
96–98, 1996–39 I.R.B.42
96–99, 1996–39 I.R.B.42
96–100, 1996–40 I.R.B.10
96–101, 1996–40 I.R.B.10
96–102, 1996–40 I.R.B.11
96–103, 1996–40 I.R.B.12
96–104, 1996–41 I.R.B.10
96–105, 1996–42 I.R.B.19
96–106, 1996–42 I.R.B.23
96–107, 1996–42 I.R.B.27
Court Decisions:
2058, 1996–34 I.R.B.13
2059, 1996–34 I.R.B.10
2060, 1996–34 I.R.B.5
Delegation Orders:
155 (Rev. 4), 1996–40 I.R.B.9
Notices:
96–36, 1996–27 I.R.B.11
96–37, 1996–31 I.R.B.29
96–38, 1996–31 I.R.B.29
96–39, 1996–32 I.R.B.8
96–40, 1996–33 I.R.B.11
96–41, 1996–35 I.R.B.6
96–42, 1996–35 I.R.B.6
Notices—Continued
96–43, 1996–36 I.R.B.7
96–44, 1996–36 I.R.B.7
96–45, 1996–39 I.R.B.7
96–46, 1996–39 I.R.B.7
96–47, 1996–39 I.R.B.8
96–48, 1996–39 I.R.B.8
96–49, 1996–41 I.R.B.6
96–50, 1996–41 I.R.B.6
96–51, 1996–42 I.R.B.6
96–52, 1996–42 I.R.B. 8
Proposed Regulations:
CO–9–96, 1996–34 I.R.B.20
CO–24–96, 1996–30 I.R.B.22
CO–25–96, 1996–31 I.R.B.30
CO–26–96, 1996–31 I.R.B.31
FI–59–94, 1996–30 I.R.B.23
FI–32–95, 1996–34 I.R.B.21
FI–48–95, 1996–31 I.R.B.36
FI–28–96, 1996–31, I.R.B.33
GL–7–96, 1996–33 I.R.B.13
IA–292–84, 1996–28 I.R.B.38
IA–26–94, 1996–30 I.R.B.24
IA–29–96, 1996–33 I.R.B.14
INTL–4–95, 1996–36 I.R.B.8
PS–22–96, 1996–33 I.R.B.15
PS–39–93, 1996–34 I.R.B.27
REG–208215–91, 1996–38 I.R.B.145
REG–209826–96, 1996–42 I.R.B.10
REG–209827–96, 1996–37 I.R.B.19
REG–245562–96, 1996–41 I.R.B.8
Public Laws:
104–117, 1996–34 I.R.B.19
104–134, 1996–38 I.R.B.7
104–168, 1996–38 I.R.B.8
Railroad Retirement Quarterly Rate
1996–29 I.R.B.14
Revenue Procedures:
96–36, 1996–27 I.R.B.11
96–37, 1996–29 I.R.B.16
96–39, 1996–33 I.R.B.11
96–40, 1996–32 I.R.B.8
96–41, 1996–32 I.R.B.9
96–42, 1996–32 I.R.B.14
96–43, 1996–35 I.R.B.6
96–44, 1996–35 I.R.B.7
96–45, 1996–35 I.R.B.12
96–46, 1996–38 I.R.B.144
96–47, 1996–39 I.R.B.10
96–48, 1996–39 I.R.B.10
Revenue Rulings:
96–33, 1996–27 I.R.B.4
96–34, 1996–28 I.R.B.4
96–35, 1996–31 I.R.B.4
96–36, 1996–30 I.R.B.6
96–37, 1996–32 I.R.B.4
96–38, 1996–33 I.R.B.4
96–39, 1996–34 I.R.B.4
96–42, 1996–35 I.R.B.4
96–43, 1996–36 I.R.B.4
96–44, 1996–38 I.R.B.4
96–45, 1996–39 I.R.B.5
Revenue Rulings—Continued
96–46, 1996–39 I.R.B.5
96–47, 1996–40 I.R.B.7
96–48, 1996–40 I.R.B.4
96–49, 1996–41 I.R.B.4
96–50, 1996–42 I.R.B.4
Tax Conventions:
1996–28 I.R.B. 36
1996–36 I.R.B.6
1996–40 I.R.B.8
Treasury Decisions:
8673, 1996–27 I.R.B.4
8674, 1996–28 I.R.B.7
8675, 1996–29 I.R.B.5
8676, 1996–30 I.R.B.4
8677, 1996–30 I.R.B.7
8678, 1996–31 I.R.B.11
8679, 1996–31 I.R.B.4
8680, 1996–33 I.R.B.5
8681, 1996–37 I.R.B.17
8682, 1996–37 I.R.B.4
1
A cumulative list of all Revenue Rulings, Rev-
enue Procedures, Treasury Decisions, etc., pub-
lished in Internal Revenue Bulletins 1996–1
through 1996–26 will be found in Internal Rev-
enue Bulletin 1996–27, dated July 1, 1996.
79

Finding List of Current Action on
Previously Published Items
1
Bulletins 1996–27 through 1996–42
*Denotes entry since last publication
Revenue Procedures:
80–27
Modified by
96–40, 1996–32 I.R.B.8
87–32
Modified by
TD 8680, 1996–33 I.R.B.5
92–20
Modified by
TD 8680, 1996–33 I.R.B.5
95–29
Superseded by
96–36, 1996–27 I.R.B.11
95–29A
Superseded by
96–36, 1996–27 I.R.B.11
95–30
Superseded by
96–42, 1996–32 I.R.B.14
1
A cumulative finding list for previously published
items mentioned in Internal Revenue Bulletins
1996–1 through 1996–26 will be found in Internal
Revenue Bulletin 1996–27, dated July 1, 1996.
80